UBS Hunts for Hidden Billionaires as It Expands in Africa

UBS has 80 people in South Africa and offers investment banking, equities research, debt capital markets services and asset management across the continent. Photographer: Gianluca Colla/Bloomberg

May 30 (Bloomberg) -- UBS AG, the Swiss bank seeking to
boost profit from wealth management, said it plans to expand in
Africa as economic growth rates surpassing 5 percent boost
demand for banking services from the continent’s rich.

“Wealth management is key to the Africa franchise,” Sean
Bennett, the Johannesburg-based managing director of UBS in sub-Saharan Africa, said yesterday in an interview. “That’s what we
lead with. We want to increase our physical presence before
year-end and then do more in the next few years,” he said.

UBS has 80 people in South Africa and offers investment
banking, equities research, debt capital markets services and
asset management across the continent. The lender globally wants
its wealth-management units to contribute half of pretax profit
by 2015, compared with 32 percent a decade earlier, and is
targeting African entrepreneurs and high-net-worth individuals
who have at least $3 million to invest, Bennett said.

“When countries grow at 7 percent, that’s a lot of people
starting to make serious money,” Bennett said. UBS has “hardly
touched the tip of the iceberg” when it comes to banking
Africa’s wealthiest, he said.

While UBS competes with rivals such as Citigroup Inc. and
Standard Chartered Plc in Africa, the Zurich-based bank focuses
on managing funds that have been transferred outside the
continent, reducing competition with domestic lenders, he said.

Nigerian growth is expected at 7.2 percent this year,
according to the International Monetary Fund, while the
organization said in April that Ivory Coast and Mozambique will
both expand 8 percent next year, the fastest pace in the region.

Hidden Billionaires

The industries contributing most to wealth creation in
Africa include resources, retail and consumer products, and
telecommunications, Bennett said.“An example would be all the
shopping malls going up in Nigeria. If you can get it right,
there’s a lot of money to be made.”

Africa may have as many as 200 “hidden” billionaires
operating in the unofficial economy who will seek to legitimize
their wealth in the future, investor Mark Mobius said in
September. Aliko Dangote, Africa’s richest man, is benefiting
from the continent’s economic growth, adding $6 billion to his
wealth this year, taking him to $20.6 billion, according to the
Bloomberg Billionaires Index.

“There are billionaires’ names out there that you wouldn’t
recognize,” Bennett said, without saying where the bank plans
to expand in Africa. With UBS mostly catering to people who are
already high profile, there is scope for growth among the hidden
billionaires, he said.